11/23/2009 9:17:00 AM Cottonwood mulls cutbacks in the face of declining revenues
Cottonwood's Finance director and Administrative Services Manager Rudy Rodriguez believes that local sales taxes will level out in 2011 but not pick up again until 2012. "We expect to maintain the 2008-level through 2012," he said.
Graph shows the future widening increase in Cottonwood expenditures compared with the major revenue sources in the General Fund.
COTTONWOOD -- While the state is hacking away at budgets for education and social services to stay afloat, Cottonwood's Finance director and Administrative Services manager told the Cottonwood Council that some serious belt tightening and an increase of fees is needed and, potentially even staff layoffs, to get through this tough economy slide. He says the picture gets worse before it gets better.
In a detailed presentation Rudy Rodriguez told the board that all city revenues are down, local sales taxes and state shared revenues.
With the addition of a new fire department engine crew and opening of the Cottonwood Recreation Center, operational costs are going up, while revenues continue to decline.
He offered a number of ways to cut costs and boost revenues, but Rodriguez urged city employees to make suggestions too.
The state predicts another decrease of State Share revenues of $350,000, making a total of $600,000 over a two-year period. Rodriguez cited state estimates that those revenues, which declined more than 13 percent this year, would not move positive again until 2012, and then, only to the level reached in 2007. Because of a two-year lag time from the state, that revival will not reach Cottonwood until 2013.
Rodriguez believes that local sales taxes will level out in 2011 but not pick up again until 2012. "We expect to maintain the 2008-level through 2012," he said.
The tax rate increase of 0.8 percent "saved our bacon during the last couple of years," Rodriguez said. The increase stabilized the revenue stream at around $10 million. Without the increase, the local revenue has dropped below $8 million.
One area Rodriguez says could save expenses is to delay the opening of the Recreational Center. While the city is already paying the debt service on the $20 million bond, the maintenance and operational costs rise from $386,000 in the current fiscal year to $810,000 in FY 2010.
Other suggestions include a hiring freeze, reduction of overtime and the overall budget, cutting the continuing education for employees, reduction of the merit program, increasing dependent insurance costs and using a four-day 10-hour work week to reduce utility costs. Rodriguez also proposes partnering with other cities, and outsourcing services. At the bottom of the list is to tap into reserve funds and to reduce the workforce.
The city needs to consider increases in fees for water and wastewater services, Rodriguez said. The "enterprise" operations are self supporting and don not depend upon the general fund. As costs increase, the revenues will not satisfy bondholders for the ratio they require.
City Manager Doug Bartosh defended the purchase of a new court building and the Foxworth complex for the utility department and evidence storage as a good opportunity for the long-term of the city.
Mayor Diane Joens warned the council "not to follow the path of the state in spending all of its "rainy day funds."
Reader Comments
Posted: Thursday, November 26, 2009
Article comment by:
Thomas McCabe
Looks like the Recreation Center has come home to roost! Sure when times were good money flowed like sweat. Now the City Council must sweat out the debt. Way back when, just two years ago, it was all hindsight and lavish (rhymes with foolish) budgets were projected as though we lived in Disneyland(DC). There was no restraint on tax and spend as though Cottonwood was a thriving metropolis and residents all owned a penthouse in the Donald Trump NY palace! Prosperity was just around the corner. Sound familiar? The metropolis has stopped growing, unemployment is rising, construction collasped, defaults are rising, shopping malls are turning into ghost towns,the garage sale index has hit a new high, anyone who can sell will sell. Rateables, including those overlooked taxpayers, are scattering across the desert. The answer: raise the sales tax again and lay off taxpayers. That will do it; it worked in the past. I might add. The recreation center competes with Rough Cut and the Old Town Athletic club. All taxable assets. What taxes or revenue will the RC generate. None! Financially it will fly like the proverbal Albatross if it EVER gets off the ground! Hmm,time to build an Annex! Good luck with it.
